Two brothers who own towing companies in Los Angeles were arrested Wednesday on felony insurance fraud charges after allegedly concealing employee wages and paying some workers in cash to evade nearly $6 million in workers’ compensation premiums.
The California Department of Insurance launched the investigation after receiving two fraud referrals alleging that Mark Hassan, owner of Hadley Tow, underreported payroll.
A third referral claimed that Ahmed Hassan, owner of California Heights Tow, filed a fraudulent workers’ compensation claim for a Hadley Tow employee.
Mark Hassan also owns FMG Inc. and, along with his brother Ahmed Hassan, operates several towing companies across the greater Los Angeles area.
Mark Hassan is listed as the owner of Hadley Tow in Whittier, Courtesy Tow in Sylmar, Crescenta Valley Tow in La Crescenta, and California Coach Towing in Walnut.
Ahmed Hassan owns California Heights Tow. These companies hold contracts with multiple law enforcement agencies throughout Southern California.
Detectives said Mark used Courtesy Tow, an uninsured company, to hide portions of Hadley Tow’s payroll.
Ahmed allegedly underreported wages at California Heights Tow to reduce workers’ compensation premiums.
Investigators found that the brothers sometimes paid employees in cash without withholding standard payroll deductions, prompting the Employment Development Department to open a tax evasion investigation.
Authorities said the combined payroll reported to insurance companies was $3,038,164, but a forensic audit showed the actual payroll was $16,716,657.
The underreporting resulted in an estimated $5,897,487 in lost premiums.
Mark Hassan was booked at the Los Angeles County Sheriff’s Inmate Reception Center, and Ahmed Hassan was booked at the West Valley Detention Center in Rancho Cucamonga.
The case is being prosecuted by the Los Angeles County District Attorney’s Office.